Correlation Between Titan Machinery and Sun Country

Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Sun Country at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Titan Machinery and Sun Country into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Machinery and Sun Country Airlines, you can compare the effects of market volatilities on Titan Machinery and Sun Country and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Titan Machinery with a short position of Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Sun Country.

Diversification Opportunities for Titan Machinery and Sun Country

0.59

Correlation Coefficient

Titan Machinery  Sun Country

Very weak diversification

The 3 months correlation between Titan and Sun is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines and Titan Machinery is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Titan Machinery are associated (or correlated) with Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Titan Machinery i.e., Titan Machinery and Sun Country go up and down completely randomly.

Pair Corralation between Titan Machinery and Sun Country

Given the investment horizon of 90 days Titan Machinery is expected to generate 1.24 times more return on investment than Sun Country. However, Titan Machinery is 1.24 times more volatile than Sun Country Airlines. It trades about 0.13 of its potential returns per unit of risk. Sun Country Airlines is currently generating about -0.05 per unit of risk. If you would invest  1,413  in Titan Machinery on December 26, 2024 and sell it today you would earn a total of  385.00  from holding Titan Machinery or generate 27.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Titan Machinery  vs.  Sun Country Airlines

Titan Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Sun Country Airlines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Titan Machinery and Sun Country

The main advantage of trading using opposite Titan Machinery and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Sun Country can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sun Country will offset losses from the drop in Sun Country's long position.

The idea behind Titan Machinery and Sun Country Airlines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.